MassPike Faces Empty Purse; GO Extensions Head to Patrick

The Massachusetts Turnpike Authority's coffers may run dry by June 30 due to unforeseen infrastructure needs and an 8% dip in traffic on the Metropolitan Highway System in March.

At the same time, a bill to extend Massachusetts' general obligation pledge on five MassPike swaps with UBS Securities LLC as counterparty moves to Gov. Deval Patrick's desk for his signature after lawmakers last week approved the measure. Patrick filed the initiative in January to help the authority ward off a potential $350 million termination fee on the derivatives.

The authority's tight finances will not affect debt service payments since MassPike has approximately $200 million in restricted reserves that cannot be used for operating needs, but go towards principal and interest costs.

Meantime, MassPike executive director Alan LeBovidge told board members yesterday that the authority may end the fiscal year on June 30 with no cash reserves.

"We have some road damage and building issues that have come up and if I can't defer the fixing of these things, we could actually wipe out our free reserves," LeBovidge said in a phone interview.

MassPike officials anticipate receiving $100 million of state aid from the legislature by July 1 or implementing a toll increase to generate the needed funds. Original plans included using the entire $100 million for capital repairs. LeBovidge now estimates that MassPike may need to use a portion of those funds for operating expenses. The authority today will post on its Web site revised fiscal 2009 budget figures.

"I'm anticipating a $9.5 million operating deficit," LeBovidge said. "Obviously we're covering that plus our capital needs this year from reserves. And what I told the board is that we could be out of free cash - not restricted reserves, which relate to bondholders - but we could be out of free unrestricted reserves on the Metropolitan Highway System by June 30."

LeBovidge declined to identify the size of the fiscal 2010 budget or its potential deficit, as officials are still working on that plan.

Missing from next year's budget will be $6 million to $10 million of anticipated revenue from a 50-cent transponder fee that Fast Lane motorists would have paid each month beginning July. The board yesterday voted to rescind that fee to help encourage drivers to use the Fast Lane system as opposed to paying tolls in cash.

Board members also voted to eliminate a planned reduction of toll collectors in response to long traffic delays at toll plazas over the holiday weekend earlier this month.

"They're going to better staff the toll booths, and actually the toll-taker layoffs that were planned are basically going on the shelf to try to assure customers that the service is going to be at a better level," said board member Mary Connaughton.

Lawmakers are working on a plan to eliminate MassPike within a year or two and restructure highway and public transportation operations in the Bay State. House and Senate members are now working on a compromise bill to send to the governor.

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